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Banking Superintendent Plays His Wild Card
Monday, January 19, 2009 (1743 reads)


If you believe in the old adage, “Desperate times call for desperate measures,” then you’ll likely find comfort in an unusual set of powers recently granted to New York State Banking Superintendent Richard Neiman by the state’s Banking Board. On September 25, 2008, after waiving its customary 30-day public comment period, the Board granted immediate authority to Superintendent Neiman to allow state-chartered banks and trusts to make emergency business loans that exceed statute-based lending thresholds for single borrowing entities.



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Banking on Economic Security
Monday, January 19, 2009 (1257 reads)


For almost two years, New York has been taking proactive steps to stem the foreclosure crisis, including direct consumer outreach, legislation, grants to support housing counseling, and increased enforcement efforts to combat mortgage fraud. As important as each of these actions is to helping borrowers at-risk, we need to do even more to ensure that a crisis like this never happens again and to provide greater economic security.



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Provident Bank: Focus on Risk Management
Monday, January 19, 2009 (1760 reads)


In the Depression of the 1930s, Provident Bank was the only bank in the Hudson Valley region that did not have to close its doors. Today, in another era of turmoil for the banking industry, Provident Bank is once again a bastion of strength and stability. In fact, it’s growing.
For the fiscal year ending September 30, 2008, Provident reported net income of $23.8 million, or [Summary].61 per share, compared to $19.6 million, or [Summary].48 per share, in fiscal 2007.



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International ACH Transactions
Monday, January 19, 2009 (1486 reads)


Facing a deadline of September 18, 2009, financial institutions are working through rigorous compliance efforts for the International ACH Transaction (IAT) standard. But IAT is much more than a compliance exercise – and the strategic opportunities are significant for those who understand the emerging landscape and how IAT may impact customer relationships, business strategies, technology infrastructures and the service mix at financial institutions.
At the very least, every financial institution that uses the ACH network has to be ready to accept an incoming IAT. Base requirements include having IT systems that can handle the extra data fields, establishing connectivity to OFAC databases, implementing processes to deal with exception items and training the back-office operations staff.



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The TARP’s Big Picture
Monday, January 19, 2009 (2604 reads)


Our banking system has become a disjointed assemblage of parts. The basic blocks seem to make up a theme or a pattern but when taken individually, make almost no sense at all.
In art, we call it Cubism. In finance we call it something we’ve never seen before.
The federal government has $700 billion to spend. The Feds think this can single-handedly prop up the economy, preventing the entire system from crashing down. But the country’s banks are not totally convinced. Some have decided that going it alone is preferable to uncertain terms and restrictions that the government imposes in the deal. While anyone might take free money, the government has yet to establish a model that seems to work, making any relationship tenuous at best and potentially disastrous at worst.



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Investing in Branching is Key to Increasing Profits
Monday, January 19, 2009 (1625 reads)


Today’s reduction in real estate demand has caused builders to suffer nationwide. Approximately four years ago, the housing market was booming and national builders could not keep up with the demand. Banks rode the construction wave and enjoyed the prosperity of a booming economy.  Now, margins are compressed and the idea of expanded real



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Driving Relationships and Profits with Merchant-funded Rewards
Monday, January 19, 2009 (1396 reads)


Credit card rewards programs have been around for more than a quarter of a century, driving significant profits to card-issuing banks. Now, increasing numbers of financial institutions are migrating to debit rewards programs, and they’re doing so in partnership with local and national merchants.
It’s a strategy that not only drives debit card usage and deepens relationships, but also creates new revenue source for the financial institution. In fact, this new merchant-funded revenue source has the potential to exceed the revenue from the traditional card interchange model.



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Criminal Investigations in the Meltdown
Monday, January 19, 2009 (1149 reads)


In recent months, federal and state law enforcement authorities announced that joint task forces in several U.S. cities – including Philadelphia, New York, Los Angeles, Dallas and Atlanta – will examine possible criminal and regulatory violations related to the subprime lending meltdown.  The task forces will determine, among other things, whether lenders and banks securitized fraudulent loans in the creation of subprime mortgage packages, and whether the securitizers of the packaged loans accurately disclosed the risks of the underlying subprime loans supporting the investment bundles.



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Be Proactive on Discretionary Overdraft Payment Programs
Monday, January 19, 2009 (1544 reads)


At this writing, the pace of activity surrounding banks’ overdraft payment service programs had quickened. The FDIC had recently released its 256 page report on these products, gathering empirical data on the types, characteristics and use of overdraft programs operated by FDIC-supervised banks. 
Proposed legislation governing overdraft programs is still on the table. That’s why we continue to encourage a call-to-action to defend overdraft services as viable and important products for banks and, more importantly, their customers. The remarkable acceptance and use of discretionary overdraft payment services is driven by customer demand and satisfaction, not banks’ greed or victimization of innocent consumers. We believe that once the FDIC report has been carefully analyzed, its findings will support the continued use and implementation of properly designed overdraft payment products.



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Low-Income Housing Tax Credits Present A Wealth of Opportunity for Banks
Monday, January 19, 2009 (1585 reads)


The Federal Low Income Housing Credit (LIHC) is an important investment vehicle available to banks and other investors for financing the creation of affordable rental housing and revitalizing communities. Despite its success, the LIHC is an investment opportunity that many banks are unaware of.
The LIHC is a national program that makes federal tax credits available to investors in affordable rental properties as a way to bring private equity into the development of affordable housing. Credits are allocated to states and administered by state housing agencies such as the Division of Housing and Community Renewal (DHCR) in New York.



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Bubbles Pop!
Monday, January 19, 2009 (1546 reads)


Bubbles pop! It doesn’t matter if they are fueled by hot air, mysterious dot.com stocks, or creative mortgage packaging. When they grow too big, they pop. And when bubbles pop, a mess usually follows.
So here we are nearly a decade past the technology stocks debacle, which took its hardest hit outside the banking industry and well into the “mess” following the mortgage bang. This one however, hit closer to home with both direct and trickle-down effects on financial institutions everywhere. Even if you were smart enough or lucky enough to have dodged the bullet on sub-primes, the resulting mess including declining margins, stricter lending criteria and higher loan to deposit ratios will all contribute to reduced interest income and tighter margins for months to come.



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